As you near Medicare eligibility, you may ask if enrolling is worthwhile if you already have employer coverage. You can delay Medicare enrollment without incurring any late enrollment penalties but there are many elements to consider. Making these decisions involves careful cost analysis between the expenses for Medicare and the cost, copays, and deductibles of your group coverage.
Employer with more than 20 employees
If your employer has at least 20 employees and you are still working, you can delay Medicare Part B enrollment. You will still need to apply for Part A at Social Security. This also applies if you get coverage through your spouse’s employer. If you decide to delay, you have 8 months to join Medicare after quitting or losing the employer coverage.
Employer with less than 20 employees
If your employer has less than 20 employees, you will need to sign up for Medicare as soon as possible. It is strongly advised that you join during the Initial Enrollment Period to avoid penalties. The Initial Enrollment Period starts three months before you turn 65, your birthday month, and lasts until three months after you turn 65.
If you do not join during the Initial Enrollment Period, you have to wait to apply during the General Enrollment Period, which is from January 1 to March 31, to get Medicare. Late enrollment fees will apply.
The late enrollment penalty for Part A is 10%, and you pay that added amount to your premiums. The Part B late enrollment fee is permanent and accrues an extra 10% per year you wait. The Part D late enrollment fee is 1% for each month you go without coverage where you were eligible to have coverage.
How Medicare and Employer Coverage Works
When you get treatments, Medicare and your employer plan will pay in a specified order instead of both at once. The first to pay is the primary payer, and the second is the secondary payer.
- If your employer has 20 or more employees, your employer’s health plan will be the primary payer and Medicare secondary payer.
- If your employer has fewer than 20 employees, Medicare will pay first and your employer’s health plan will be the secondary payer, so you will need both Part A and Part B.
- If you have a high deductible health plan and you sign up for Medicare, you can no longer contribute to your health savings account.
- You cannot contribute to an HSA if you have any part of active Medicare, nor can you accept any contributions from an employer.
Medicare Advantage and Employer Coverage
Medicare Advantage does not allow you to have any other form of health insurance coverage. If you join Medicare Advantage, you will end up losing your employer coverage.
